Monday, August 23, 2010

8 Bold New Forecasts for 2010

From Martin Weiss Research. Basically, we're sliding back down the rabbit hole, and last year's horrors will replay themselves--the old BRIC portfolio plays are coming back.

The forecasts:
1. The Obama administration and Congress will be paralyzed, unable to pass another big stimulus package, and unable to prevent a double-dip recession.

This would actually be a GOOD thing, because it means government has to step back from massive deficit spending, and business now has to step up...this spells R-E-C-O-V-E-R-Y.

2. The entire burden of fighting recession and financing deficits will fall on central banks. Therefore, Bernanke and his counterparts in Europe will launch a second, even bigger round of money printing.

The GOOD part of this? Interest rates will be kept low for the foreseeable future. The BAD part? Devalued dollars--worse than we already have. However, this is good for trade, because foreign countries can no buy our crap at even bigger discounts than before...if we ever make things again.

3. The sovereign debt crisis will soon return with a vengeance — first in Eastern Europe, then in the U.S. and the U.K.

In other words, our bonds will be worthless as their interest rates climb higher and higher to offset the much-increased risk in owning them. No matter what the tempting offer, STAY AWAY FROM BONDS!!

4. The government debt burden in the United States will soon be worse than the debt burden in Greece! Ultimately, the debt burden in the U.S. will reach 400% of GDP, more than triple the debt burden of Greece today.

Couple this with super-devalued dollars and a government that's out of bullets to shoot into this economy, and yep, we're headed into a depression that will make the last one seem tame by comparison. Yep, we're definitely looking at higher taxes for ALL income brackets, so top off your pantries now for at least a two-year period. We may also be looking at layoffs at the top levels--federal government--so whatever debt and money arrangements you need to make, do it now while the banks are still open. Public services are likely to get cut, so you may have seen your last unemployment extension, as well as some unemployment workers. Undoubtedly, there will be cuts in food stamp/welfare/SSI, Medicaid/Medicare, and other social safety net programs, and the people who work in them.

Corporations and businesses have been hoarding cash, and they should step in at this time. They won't throw ALL their lot in at once, but will trickle in over the next decade while new incoming Congress-critters will be elected to clean up this mess and put us back on a decent fiscal course--first on that docket will be repealing Health Care Reform.

5. Starting right now and continuing for years, the growth in China will to be at least four times greater than that of the U.S. and Western Europe.

They have the cash to sustain it. Still, I wouldn't invest there--the politics are too unstable, and the growth won't last forever.

6. Over the next 12 months, investors in Indonesia will make even more money than investors in China.

In other words, there's something better than China, and with friendlier governments, too.

7. While Asia outperforms the U.S. and Europe, Brazil and Chile will outperform most of Asia!

I'd bet more on Chile than Brazil--we know from past articles that Brazil's population is just as crazy about over-spending as we are. Besides, Brazil has a dictator, while Chile has an elected president.

8. Some of the greatest fortunes in the world will be made in international ETFs!

Okay--this is where I get off the train. The original article recommends specific ETFs, but I want you to do your homework and find YOUR OWN investments. Beware that ETFs cannot be placed in an IRA account, but CAN be placed in a Roth account, and may not be as tax-friendly to you if bought outside Roth accounts.


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